The Biden administration on Wednesday extended a student loan moratorium that has allowed tens of millions of Americans to put off debt payments during the pandemic. Under the action, payments on federal student loans will remain paused through May 1. Interest rates will remain at 0% during that period, and debt collection efforts will be suspended. Those measures have been in place since March 2020, but were set to expire Jan. 31 after being extended a number of times, reports the AP. In a statement, President Biden said financial recovery from the pandemic will take longer than job recovery, especially for those with student loans.
"We know that millions of student loan borrowers are still coping with the impacts of the pandemic and need some more time before resuming payments," he said, adding it was an issue he and the vice president "both care deeply about." Administration officials had initially said they expected the January extension to be the last. But even as the economy improves, there are concerns that borrowers are not ready to start payments again. Once the moratorium ends, those who were already behind on payments could have wages and benefits taken away as part of debt collection efforts.
The policy applies to more than 36 million Americans who have student loans that are held by the federal government. Their collective debt totals more than $1.37 trillion, according to the latest Education Department data. About a third of borrowers are in default or delinquency and the average monthly payment is $400 a month. Officials said the pause also helps about 5 million other borrowers currently in school who are not yet paying back loans but are accruing interest.
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